New‐ CEO earnings news exhibits asymmetric effects on stock prices. Stock prices rise more on good earnings news announced by firms with new CEO s compared with those with established CEO s. By contrast, stock prices tend to fall by a smaller amount on bad earnings news for new CEO s. Both the new‐ CEO quality effect and the new‐ CEO honeymoon effect are more pronounced for CEO s appointed during challenging situations. The new‐ CEO quality effect is stronger for firms followed by fewer analysts, while the honeymoon effect is stronger for firms followed by more analysts – illustrating the importance of a transparent information environment.
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Geertsema et al. (2016) studied this question.
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